2009-04-15

By Editor, CIR

Chancellor Alistair Darling's Budget on April 22 will include a state guarantee scheme for supply chain insurance, according to reports.

The government aims to help small and medium-sized businesses whose supply lines are threatened by a reduction in credit insurance, which protects companies that supply goods on credit against the risk that they will not get paid.

Many businesses have suffered as insurers have increased premiums or declined cover for some firms in sectors worst-hit by the recession, such as contruction.

The scheme comes after months of negotiations with insurers spearheaded by Lord Mandelson, the business secretary, who has responded to requests from industry for a government initiative.

The EEF manufacturers' organisation warned earlier this year: "The speed at which credit insurance is being withdrawn threatens the supply chains that are the heart of the UK's manufacturing base."

Reports suggest that the scheme will target medium-risk businesses and offer guarantees for companies that have seen cover reduced but not withdrawn.

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